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2016 (4) TMI 795 - HC - Central ExciseInterest under Section 11AA - effect of amendment - Held that - A careful look at the tabulation would show that the distinction between the two categories of cases that was maintained upto 11.5.2001 disappeared to some extent by the amendment inserted from 11.5.2001. Though a small distinction was still retained, the liability to pay interest became common for both categories of cases and a distinction was retained only in respect of the minimum ratio of interest and the date of commencement of liability post 11.5.2001. In cases where the payment was made voluntarily after determination of the amount of duty under Section 11A, the amendment stipulated a minimum rate of interest at 10% per annum and a maximum rate of interest at 36% per annum. But, in other cases, the minimum rate of interest was maintained at 18% per annum. Except this, the distinction between the two categories of cases was diluted. After amendment with effect from 8.4.2011, Section 11AA itself is removed. Therefore, all types of cases where there is a determination under Section 11A(2) are treated alike irrespective of the presence or absence of fraud, collusion, etc. Getting back to the cases on hand, it could be seen that the periods, in respect of which, the show cause notices were issued, were all from 1997 to 2000. The show cause notices covered by the Order in Original bearing Nos.18/2000 and 54/2000 were dated 2.4.1998, 1.7.1998, 18.11.1998, 1.4.1999, 30.7.1999 and 1.12.1999 as well as 5.4.2000 and 25.4.2000 respectively. The show cause notices covered by the Orders in Original bearing Nos.42/2001 and 43/2001 were exactly dated 11.5.2001. Hence, out of the four cases on hand, two relate to the show cause notices issued on the date, on which, the amendment to Sections 11AB and 11AA came into force. In respect of the remaining two cases, they cannot be covered by the amendment introduced with effect from 11.5.2001. In so far as the cases where show cause notices were issued before 11.5.2001, it is seen from all the show cause notices, the Orders in Original and the orders of the Appellate Authority that there was no allegation of fraud, collusion, misrepresentation, etc. Even the communication of the Superintendent dated 12.11.2013 does not categorise the case of the assessee as one where there was fraud, collusion, etc. But, the communication of the Superintendent dated 12.11.2013 refers to Section 11AB. Therefore, it is obvious that the amendment dated 11.5.2001 is what is sought to be taken advantage of. This cannot be done at least in respect of two cases that arise out of the Orders in Original bearing Nos.18/2000 and 54/2000 respectively dated 29.2.2000 and 30.10.2000. Hence, the questions of law in respect of the appeals arising out of these orders in relation to the interest claim, should be answered in favour of the assessee. There is a difficulty. In so far as the Order in Original bearing No.54/2000 is concerned, the demand for payment of interest was made at 24% per annum under Section 11AA. This demand, without any discussion, was upheld by the Appellate Authority as well as the Tribunal. The Appellate Authority as well as the Tribunal ought to have at least considered as to why a rate of interest at 24% was chosen between the minimum of 10% and the maximum of 30%. The case of the assessee was that there was a claim for refund, which could have been adjusted by the Department. While passing an order in appeal No.178/2003, the Appellate Commissioner found that at least in respect of the claim under Order in Original bearing No.18/2000, it was adjustable. Therefore, that portion of the order of the Tribunal as well as the order in appeal is without any application of mind to the quantum of interest under Section 11AA.
Issues Involved:
1. Demand for additional duty of excise. 2. Payment of interest on delayed duty under Section 11AB of the Central Excise Act, 1944. 3. Applicability of amendments to Sections 11AA and 11AB. 4. Validity of interest rate determination under Section 11AA. 5. Timeliness and maintainability of miscellaneous petitions for clarification and rectification. Detailed Analysis: 1. Demand for Additional Duty of Excise: The appellant, holding central excise registration No.7/92, was engaged in manufacturing polyester yarn and poly viscose and availed MODVAT facility. They were issued multiple show cause notices for various periods between 1997 and 2000, demanding additional duty of excise totaling Rs. 20,27,588/-. These show cause notices resulted in Orders in Original confirming the demand. The Tribunal confirmed these orders, and the High Court found that the appellant had adopted a lower assessable value than the actual value of clearance, which is a finding of fact. Therefore, no question of law arose, and the appeals (C.M.A. Nos.1949 to 1952 of 2015) were dismissed. 2. Payment of Interest on Delayed Duty: After the Tribunal's final order, the Superintendent issued a communication demanding interest of Rs. 26,68,917/- under Section 11AB. The appellant's reply was rejected, leading them to file miscellaneous petitions for clarification and rectification, which were dismissed by the Tribunal. The High Court noted that the liability to pay interest is automatic under Section 11AB if duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded. 3. Applicability of Amendments to Sections 11AA and 11AB: The amendments to Sections 11AA and 11AB were crucial in determining the interest liability. Before 11.5.2001, interest under Section 11AA was not automatic and was payable only if duty was not paid within three months of determination. Section 11AB applied in cases involving fraud, collusion, etc. Post 11.5.2001, the distinction between the two categories was diluted, and interest became common for both categories, with a minimum rate of 10% per annum and a maximum of 36%. 4. Validity of Interest Rate Determination under Section 11AA: For cases where show cause notices were issued before 11.5.2001, the High Court found no allegations of fraud, collusion, etc. Hence, the amendment dated 11.5.2001 could not be applied. The demand for interest at 24% per annum under Section 11AA was upheld without proper discussion by the Appellate Authority and the Tribunal, which was found to be without application of mind. 5. Timeliness and Maintainability of Miscellaneous Petitions: The Tribunal dismissed the miscellaneous petitions for clarification and rectification on the grounds that they were filed beyond six months and did not fall under Rule 41 of the CESTAT (Procedure) Rules, 1982. The High Court upheld this decision, noting that the petitions were not maintainable. Judgment: - Appeals (C.M.A. Nos.1949 to 1952 of 2015) regarding the demand for additional duty of excise were dismissed. - Appeals (C.M.A. Nos.1630 and 1631 of 2015) related to Orders in Original bearing Nos.18/2000 and 54/2000 were allowed, answering the questions of law in favor of the assessee. - Appeals (C.M.A. Nos.1632 and 1633 of 2015) related to Orders in Original bearing Nos.42/2001 and 43/2001 were dismissed, as they pertained to show cause notices dated exactly 11.5.2001. - No costs were awarded, and the connected miscellaneous petitions were closed.
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